1978 (6) TMI 162 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of legislative powers regarding deduction of tax on taxable turnover under Himachal Pradesh General Sales Tax Act due to declaration of wheat as article of special importance in inter-State trade under section 14 of the Central Sales Tax Act.

Analysis:
The petitioner, a flour mill owner, contended that the automatic addition of wheat in Schedule D, due to its declaration under section 14 of the Central Sales Tax Act, deprived them of the deduction under clause (ii) of section 6(3) of the Himachal Pradesh Act. The petitioner argued that this automatic addition infringed on the legislative powers of the State Legislature. The Court examined the legislative provisions and historical background of the dispute to assess the petitioner's contentions.

The Court highlighted that the deduction under clause (ii) of section 6(3) was permissible for goods not specified in Schedules C and D of the Act. Wheat was initially not covered under Schedule D, allowing the petitioner to claim the deduction. However, upon wheat's declaration as an article of special importance under section 14 of the Central Sales Tax Act, it was automatically included in Schedule D, leading to the denial of the deduction to the petitioner.

The Court referenced the Supreme Court's decision in the Pondicherry case, emphasizing that abdication of legislative powers was disapproved. However, it differentiated the present case from the Pondicherry case, stating that the Himachal Pradesh Legislature had not abdicated its powers. The Court noted that the State Legislature had enacted clause (ii) of section 6(3) to define deduction criteria, considering goods of special importance in inter-State trade as designated by the Central Legislature.

Moreover, the Court clarified that the State Legislature retained the power to legislate on commodities like wheat. It explained that the automatic operation of clause (ii) of section 6(3) did not render section 43, which empowered the State Government to amend schedules, irrelevant. The Court concluded that the State Legislature had not surrendered its judgment or abdicated its powers, as it had established a legislative framework for deductions, including provisions for automatic inclusion of declared goods in Schedule D.

The Court rejected the petitioner's argument that subsequent additions to Schedule D should not affect existing deductions, noting that Schedule D originally encompassed "all other declared goods." Ultimately, the Court dismissed the writ petition, finding no merit in the petitioner's claims and rejecting the request for certification to appeal to the Supreme Court.

In conclusion, the judgment upheld the legality of the automatic addition of wheat in Schedule D and affirmed the State Legislature's exercise of its legislative powers in enacting deduction provisions under the Himachal Pradesh General Sales Tax Act.